Calculating Alimony Buyout: Do It Yourself Or Hire An Accountant?

Alimony buyout has a number of financial advantages, not to mention it allows both spouses to move on rather than being reminded of the failed relationship by the monthly check. Divorce software for attorneys can come up with the monthly alimony but how do you figure out a fair buyout. There are two choices: do it yourself or hire an accountant.

Do It Yourself

How hard could it be to figure out? If divorce software calculates alimony to be $1,500 per month for 60 months then the buyout should be ($1,500) x (60) = $90,000, right?

Well, no.

The problem is that a dollar is not a dollar. A 2013 dollar doesn’t have the same value as a 2018 dollar so the buyout needs to be adjusted by inflation. Not to mention that the recipient isn’t going to simply put the money in a mattress. Investment will cause that $90,000 to grow to a much higher number. And there are the tax implications, especially if the two parties are in different tax brackets.

Hire An Accountant

Calculation of the buyout isn’t a simple arithmetic problem so maybe we need to bring in an expert. Divorces are basically financial transactions to most family law attorneys have an accountant or two on their contact lists. Pull the couples’ financial information out of the family law software and this should be an easy task for an experienced accountant.

Of course the problem is experienced professionals are expensive professionals. That easy task will probably carry a stiff price tag. This won’t cost you anything since you’ll pass that cost onto your client, but is that fair? Your client has enough financial problems going through a divorce without adding unnecessary expenses.

What other choice do you have?

The Hidden Third Option

I’m going to let you in on a little secret: computers are really good at math.

Divorce Financials, Easy Soft’s divorce settlement software, includes an alimony buyout calculator that knows all about inflation and investment and taxes. You simply enter the alimony amount and duration. It calculates the marginal tax rate based on the spouses’ incomes, and even can adjust for the possibility that alimony might not continue through its entire term. You get the expertise of a family law accountant for free.

Try it for yourself. Download a demo of Divorce Financials and use information from one of your divorce cases. You’ll see how Easy Soft legal practice management software takes complicated transactions and makes them simple.